Glossary

Barriers
The barrier of a binary option trade is the price target you set for the underlying. You can choose trades that stay below or go above a price target, or stay between two targets.

Binary Option
A binary option is a contract purchased by a trader, which pays a pre-determined amount if their prediction is correct. Contract Period

The contract period is the timeframe of a trade. It is also called the duration.

Derivative

A derivative is a financial instrument whose value is determined by reference to an underlying market. Derivatives are commonly traded in the inter-bank market, and binaries are one of the simplest forms of derivatives.

Duration

The duration is the length of a purchased trade (see 'contract period').

Entry price

The entry price is the starting price of the trade purchased by a trader.

Expiry Price

The expiry price is the price of the underlying when the contract expires.

Forex

In foreign exchange markets, traders can enter contracts based on the change in price of one currency as it relates to another currency. For example if a trader selects Rise in the EUR/USD market, they are predicting that the value of the Euro will rise in relation to the value of the US dollar.

High/Low Trades

These are trades where the trader predicts if a market will finish higher or lower than a specified price target.

Indices

Stock market indices measure the value of a selection of companies in the stock market.

In/Out Trades

These are trades where the trader selects a low and high barrier, and predicts if the market will stay within these barriers or go outside them (see also 'Stays Between/Goes Outside trades').

Market Exit Price

The market exit price is the price in effect at the end of the contract period.

No Touch Trades

These are trades where the trader selects a price target, and predicts that the market will never touch the target before the expiry of the trade.

Payout

The payout is the amount paid to an options trader if their prediction is correct.

PIP

Pip stands for 'percentage in point' which is generally the fourth decimal place (i.e. 0.0001).

Profit

The profit is the difference between the purchase price (the stake) and the payout on a winning trade.

Volatility Indices

The volatility indices simulate various real market situations and provide an ideal platform for getting used to trading and testing strategies under various market conditions. These indices depend on volatility and drift, and help users to try out scenarios like - high volatility, low volatility, bullish and bearish trends.

Return

The return is the money realized when the contract expires (see 'Payout').

Sell Option

It is sometimes possible to sell an option before the expiry of a trade, but only if a fair price can be determined. If this option is available, you will see a blue 'Sell' button next to your trade in the portfolio.

Stake

The stake is the amount that a trader must pay to enter into a trade.

Tick

A tick is the minimum upward or downward movement in the price of a market.

Underlying

Each binary option is a prediction on the future movement of an underlying market.